Health Insurance Policy Provisions and Clauses
Required (mandatory) provisions
States require a standard set of provisions, drawn from NAIC models. Candidates should recognize each:
- Entire contract - the policy and attached endorsements comprise the agreement; only an authorized officer may change it.
- Time limit on certain defenses - after two (sometimes three) years, the insurer cannot contest the application except for nonpayment of premium; this is the health policy incontestability clause.
- Grace period - commonly 7 days for weekly premiums and 10 days for monthly premiums (often 31 days for individual major medical); coverage continues if premium is paid within it.
- Reinstatement - usually available within 45 days with evidence of insurability and payment of overdue premium.
- Claim forms - insurer must furnish forms within 15 days of notice; if not furnished, the claimant may submit proof in another form.
- Proof of loss - typically within 90 days of loss.
- Time of payment of claims - immediate or within 45 days after proof.
- Physical examination - insurer may require exams, at its expense.
- Legal actions - suit may not be filed before 60 days after proof or more than three years after proof is required.
- Change of occupation, misstatement of age, other insurance, overinsurance, illegal occupation, unpaid premium, conformity with state statutes.
Optional provisions and clauses
Probationary period, pre-existing condition limitation, impairment rider (excludes a named condition with a premium reduction), elimination period, benefit schedule, and the usual exclusions (self-inflicted injury, war, workers compensation).
Trap: the claim-forms provision does not let the insurer delay - if forms are not provided, the insured may file by other means. Rule of thumb: two years for defenses, 15 days for forms, 90 days for proof, 45 days for payment, three years for suit.